Net Claims Of Non-Residents On India Declined By US$ 6.4 Bn

The rise in India’s foreign liabilities was attributed to higher inward direct investments, portfolio investments, loans as well as currency and deposits taken by resident entities

FinTech BizNews Service

Mumbai, June 26, 2024:The Reserve Bank has released data relating to India’s International Investment Position for end-March 2024.

Key Features

IIP during January-March 2024:

• Net claims of non-residents on India declined by US$ 6.4 billion during Q4:2023-24 to US$ 361.7 billion as at end-March 2024.
• Indian residents’ overseas financial assets recorded higher rise (US$ 38.1 billion) as compared to that in the foreign-owned assets in India (US$ 31.7 billion), which led to the decline in net claims of non-residents during the quarter.
• The rise in India’s foreign liabilities was attributed to higher inward direct investments, portfolio investments, loans as well as currency and deposits taken by resident entities even as trade credits recorded a marginal decline.
• Increase in the reserve assets (US$ 23.9 billion) was the dominant component of the rise in Indian residents’ overseas financial assets during January-March 2024, followed by currency and deposits, and overseas direct investments.
• On an outstanding basis, reserve assets accounted for 62.9 per cent of India’s international financial assets in March 2024
• The ratio of India’s international assets to international liabilities improved to 74.0 per cent in March 2024 from 72.9 per cent a quarter ago.
• The share of debt liabilities in total external liabilities increased marginally during the quarter and stood at 51.1 per cent in March 2024.

IIP during April-March 2023-24:

• During 2023-24, the net claims of non-residents declined by US$ 5.5 billion on the back of higher rise in India’s external financial assets (US $ 109.8 billion) vis-à-vis external financial liabilities (US $ 104.3 billion).
• Reserve assets accounted for 62 per cent of the increase in total overseas financial assets of residents: currency and deposits, and overseas direct investments were other major components.
• Inward portfolio and direct investments as well as loans accounted for over three-fourths of the rise in foreign liabilities during the year.
• Variation in the exchange rate of rupee vis-a-vis other currencies impacted the change in liabilities, when valued in US dollar terms.
• The ratio of India’s international financial assets to international financial liabilities increased to 74.0 per cent in March 2024 from 71.4 per cent a year ago.

Ratio of International Financial Assets and Liabilities to Gross Domestic Product (GDP):

• As a ratio to GDP (at current market prices), India’s reserve assets and residents’ overseas financial assets as well as liabilities increased during 2023-24.
• The ratio of net claims of non-residents on India to GDP improved to (-)10.3 per cent in March 2024 from (-)11.3 per cent a year ago, and (-)11.6 per cent two years ago.